[Click eStock] "Jeryong Electric, at the Early Stage of Power Sprint"

Yuanta Securities analyzed on the 8th that production expansion is expected for Jeryong Electric due to exports to the United States.

Jeryong Electric is a specialized manufacturer of distribution transformers established in 1986. The sales proportion is 100% distribution transformers, and the export ratio surged from 25% in 2021 to 80% last year. The provisional performance figures for last year showed sales of 183.9 billion KRW and operating profit of 70.2 billion KRW, increasing by 113.7% and 338.9% respectively compared to the previous year.

Researcher Son Hyun-jung of Yuanta Securities stated in the report on the same day, “The surge in exports due to the shortage of transformer supply in the U.S. has driven top-line growth,” and added, “Jeryong Electric’s order backlog as of the end of Q3 last year was 323.1 billion KRW, an 88% increase compared to the same period last year.”

Researcher Son explained, “The transformer industry has entered a new expansion cycle since 2022,” and “The U.S. Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) are driving demand for power equipment replacement.”

He also forecasted, “The increase in power demand due to advancements in artificial intelligence (AI) technology and data center expansion is expected to continue,” and “The expansion cycle is likely to persist until the U.S.-centered supply chain restructuring is completed, leading to a structural growth trend in Jeryong Electric’s production volume.”

Furthermore, he analyzed, “The producer price index for transformers hit a record high in January,” and “Meanwhile, Jeryong Electric is improving production efficiency through cost reduction by recruiting skilled personnel and adopting a small-variety, large-quantity production method.”

He added, “Moreover, the recent decline in prices of raw materials for transformers, such as electrical steel sheets and copper, is expected to lead to an expansion of margin spreads.”